Liabilities in Net Worth calc includes "spending"

leastein

Historical net worth graph is all over map. Liabilities include Spending, which seems to be large total of all expenditures during given period, which then bleed down over time til it hits zero. Is there way to correct this?

Running 2019 Quicken Premier ver R20.15 on Win 10 machine

UKR

leastein said:

Not exactly. The current balances are fine and have been over time. The problem seems to that when I did year end copies a few years ago, I somehow only deleted payments from current accounts, not the income. So to keep accounts balanced, the program automatically changed the opening balance with a large negative number which was whittled down over time with the inflows. Works out, but the net worth history has the big step downs from time to time which then climb back as the year proceeds.

Your observation is correct.
Year End Copy in investment accounts does not remove investment transactions (Buy, Sell, DIv, etc.). But, all cash transactions like transfers into and out of the account that are reconciled are removed.

To keep the running balance correct, the Opening Cash Balance at YEC cutoff date is recalculated and may show a large negative amount. When adding the value of your Holdings back in, the numbers will be correct again.

Looks odd. Confusing as heck. But correct ...

Tom Young

I think you need to explain more clearly what's going on hereA, including which particular "net worth graph" you're referring to.   A picture can be worth a thousand words.

"Spending" - and by that I assume you're referring to the ACCOUNTS comprising the "Spending & Savings" groups of Accounts in Quicken - should be included as Liabilities if any of those Accounts have a credit balance.  (I'm using "credit balance" in the strict accounting sense, meaning that those balance sheet Accounts show you owing money.)

And if you use your credit cards heavily for a period you'd expect those Accounts to have large credit balances which would be reduced over time as you made your payments.

I'm just not sure what it is you're seeing here.

NotACPA

And, taking the title of this thread literally, If you spend $1 on something, your Net Worth is reduced by $1.  If you spend $10,000, your Net Worth is reduced by $10,000.

What would you expect to see?

leastein

Sorry for lack of clarity. Net worth should be assets minus liabilities. Spending is not a liability. Mortgage and credit card debt is. As I've dug into this, I have bank accounts that have been changed by the program to have a large, negative opening balance. This diminishes over time with inflows until it shows a proper account balance. But these negative opening balances on the bank accounts kills the validity of the historical net worth numbers.

Jim_Harman

Is "No security (includes cash)" included in the securities for the report? It gives strange results if not.

NotACPA

"Spending is not a liability. "

BUT, "spending" either increases your liability (if you use a credit card, or such) OR reduces your Assets (if you use cash or a checking account).

Spending DEFINITELY impacts your Net Worth.

Tom Young

" But these negative opening balances on the bank accounts kills the validity of the historical net worth numbers. "

More importantly, it misstates the running balances of all those checking accounts, something I'd think you'd have noticed somewhere along the line.

If opening balances have been changed for several bank accounts that suggests some sort of data corruption, not simply a stray cosmic ray.  I'd suggest copying your file and validating the copy.

I'd guess that won't fix the misstated opening balances so you'll have to do that along with whatever file cleanup is needed. 

leastein

Not exactly. The current balances are fine and have been over time. The problem seems to that when I did year end copies a few years ago, I somehow only deleted payments from current accounts, not the income. So to keep accounts balanced, the program automatically changed the opening balance with a large negative number which was whittled down over time with the inflows. Works out, but the net worth history has the big step downs from time to time which then climb back as the year proceeds.

UKR

leastein said:

Not exactly. The current balances are fine and have been over time. The problem seems to that when I did year end copies a few years ago, I somehow only deleted payments from current accounts, not the income. So to keep accounts balanced, the program automatically changed the opening balance with a large negative number which was whittled down over time with the inflows. Works out, but the net worth history has the big step downs from time to time which then climb back as the year proceeds.

Your observation is correct.
Year End Copy in investment accounts does not remove investment transactions (Buy, Sell, DIv, etc.). But, all cash transactions like transfers into and out of the account that are reconciled are removed.

To keep the running balance correct, the Opening Cash Balance at YEC cutoff date is recalculated and may show a large negative amount. When adding the value of your Holdings back in, the numbers will be correct again.

Looks odd. Confusing as heck. But correct ...

leastein

Wish I'd known before ... can't tell you the hours I've wasted trying to solve. But thanks for your affirmation. Helpful.